Rumors
of line rationalizations are circulating, as are cutbacks in local service
frequency and railyards closing. Therefore, plant siting decisions are at some
risk until strategic railroad network and yard change patterns settle in.

What
could these changes possibly mean to your service locations?

If
you’re a long-time rail freight customer with some plants and warehouses aging
– and questions within your own organization about where to locate replacement
facilities – how do you evaluate your location options?

If
you are new to railroad freight, how do you establish a site check list?

Here
are a few suggestions for both circumstances.

The
Class I railroads offer industrial real estate assistance. They have land maps,
labor and utility cost index data, and related materials to offer. However, the
real estate departments are not the railroads’ strategic planners. Employees in
those departments may or may not be in the inner circle of “high level network rationalization.”

State
departments of transportation (DOT), major utilities, ports and local
communities also offer help in site planning. However, they are not likely to
have knowledge about pending railroad network changes.

Beyond
these choices, consider these next steps as prudent due diligence.

First,
consider public domain documents useful in helping to define the sustainable
freight rail network core. In the hands of skilled railroad cost experts, that
kind of data can signal geographic shifts ahead.

For
this task, a key source is the quarterly reports to investors. Railroads target
that audience with useful intelligence about their likely market and
operational changes. It is often surprising how much strategy they reveal. Assembling
a file of successive quarterly reports may provide information about potential
changes in market and network geography.

For
a deeper look, check text published in railroads’ periodic filings with the
Securities and Exchange Commission (SEC). Always examine the footnotes. Intelligence
is often hidden in plain site within the smaller font footnotes.

Monitor
the changes in the railroads’ multiple year debt structure and announced
capital plans. You’re looking for a
pattern. That requires consistent note taking and locational cross-checking
over multiple years… maybe longer. You’re looking for a change in pattern,
location and operating practice that tells a story. A review of the last half-year
to year is insufficient coverage. Due diligence is not a quick task.

Check
how freight schedules of the services you require are being modified. Announced
intentions of higher quality and service by lane should be examined in terms of
your strategic corridors – by railroad lanes.

Your
receiver dock files are likely the critical indicators of reliability changes.
Check the AEI rail car tag records for actual delivery performance – in
contrast to constructive placement and EDI recorded records. What are the real
service and car cycle patterns your plants are receiving?

In
the digital age, strategic plant site and industrial real estate decisions are
still about location, location, location…

Various
technical density maps are the next recommended source. They are rich in intelligence
– if you learn how to interpret them over time periods.

Railroads periodically publish density maps that show freight volume over their strategic corridors. Where do you find such maps? They are found most often in a railroad’s Fact Books or in some specific commodity group corporate presentations. The map images are a specific statement of a railroad’s key routes. But changes over time can be spotted if you know where to look.

Corridors
that demonstrated shifts to significantly lower traffic density in recent years
are one of the footprints you’ll need to interpret. As an example, what’s a
drop of 20 percent or more in traffic density like gross revenue ton-miles (GTM)
via one of five New Orleans’s rail routes mean? You will need more than the gross-ton miles
indicator and timeline to translate that data point. Nevertheless, it’s a metric to consider.

What
if that data isn’t published officially by the railroad company you are
considering as your long-term vendor at a site?

There
are third-party resources that track such traffic changes. You may need to seek
railroad operational expert help.

State
DOTs and their rail planning staff monitor rail company GTM changes, normally
on an official basis since the railroad companies keep close with them in order
to obtain periodic public/private participation project funding. Be aware that
the state industrial development staffs might not know about or how to use that
strategic density change data. Therefore, you may have to request that they talk
to their DOT mates.

Here is one example of state assistance. It is a South Dakota State Railroad Plan Map of Strategic Railroad-Served Shuttle Train Elevators. Some are located on very light density lines. Some sites may lack well-engineered rail track, ballast and ties for 286,000-pound loaded grain cars.

In
the absence of railroad or state sources, third-party consultants can offer a
series of calculated traffic pattern insights.

You
will need to determine future trends regarding your sites. The important part
isn’t the history; its interpreting and projecting future shifts. That involves
interpolating the historic patterns against the evolving new railroad business
model.

Heavy
axle loadings between 286,000 and 315,000 pounds per car – or higher

Conclusion
and Sources

The
conclusion is that there are insightful text and graphics in the public domain
upon which to judge your specific rail freight locational strategy.

Be alert please. Not all published maps are still valid. This map with a projected change in traffic volume out to the year 2035 was well-researched and presented when published a little over a decade ago. But it is out of date because of changes in the market and the restructuring that railroads have undergone – and will continue.

Beyond
the few images in these pages, here are selected internet sites. They will direct
you to copy protected images from sources I highly recommend after decades of
professional subscription use. You will not see the entire graphics, but you
will get a technical impression of their possible utility.

Jim Blaze is a railroad career economist with an engineering background and a strategic analysis outlook. Jim’s career spans 21 years with Consolidated Rail Corporation (CONRAIL), 17 years with the rail engineering firm Zeta Tech Associates, 7 years with the State of Illinois Department of Transportation in Chicago urban goods movement research, and two years studying what to do with the seven bankrupt and unrecognizable Northeast railroads at the federal agency USRA. Now primarily a teacher and writer, Jim likes to focus on contrarian aspects of the railroad industry.